India's dairy reset: The growth of lactose-free milk in India

India holds the position as the world’s largest producer of milk, deeply integrating dairy into its cultural and dietary fabric. Yet, beneath this status quo, a quiet revolution is underway. Rising health consciousness and disposable incomes have caused a growing demand for lactose-free products. This shift is driven by the fact that an estimated 67 per cent of the Indian population suffers from some degree of lactose malabsorption, according to the National Library of Medicine. This underserved consumer base is fuelling a high double-digit growth in the category, where Amul stands as the market leader with more than 90 per cent share.

In an exclusive interview with LiveMint, Jayen Mehta, MD of Amul (GCMMF), spoke about what makes lactose-free milk different, Amul’s future outlook for this category and the strategic pillars of this growth that are moving lactose-free dairy from a specialised niche to a daily staple for consumers across the country.

The nutritional science of lactose-free

For consumers who experience digestive discomfort with regular milk, the shift to a lactose-free alternative offers a way to retain the nutritional benefits of dairy. The difference lies in a key enzyme treatment performed on the milk before packaging.

“In lactose free milk, lactase enzyme is added in milk before its final packing. Through this lactase enzyme, lactose (milk-sugar) gets broken down to glucose and galactose before even it gets consumed. So, any lactose intolerant person can easily consume and digest milk and milk products,” he explained.

The essential protein and calcium content remain intact in the milk, ensuring that consumers receive the full dietary value without the accompanying digestive issues. The modification is purely focused on the sugar component. “There is no nutritional change or compromise that happens in milk. All the nutritional benefits in the form of calcium, protein, etc remain intact, just like normal milk,” he further said.

Building a comprehensive portfolio

The expansion of the lactose-free market is directly tied to the variety of products offered. Amul has moved beyond just plain milk to create a full portfolio of lactose-free products to cover various kinds of consumption needs. This is further driving the high growth rate that is being seen for this category.

“We pioneered lactose free milk, and today we have a big range of lactose free products,” said Mehta. This diverse range includes lactose-free ice cream, lactose-free high protein dahi, single-country coffee variants, whey protein concentrate and even lactose-free peda.

This range is a strategic effort to encourage consumer adoption. “We are creating a portfolio of products... and that would help at least gain consumer traction for those who are not able to digest the milk with regular lactose because of the absence of lactose enzyme,” he said.

Expanding the reach of lactose-free products

Addressing the popular perception of lactose-free products being expensive, Amul has focused on pricing to ensure accessibility for a broad consumer base. Mehta spoke about the company’s pricing philosophy for this category: “We don't actually intend to charge any premium for lactose free products. Also, for us, both customers are the same. And that is how we have been able to grow this market significantly.” A 250 ml Tetra Pak carton of lactose-free milk costs just ₹25. The single-country origin coffee (lactose-free variant) and high-protein curd are also priced reasonably.

The brand’s intention is clear: “As a brand, we want to offer things which consumers look for.” By focusing on offerings like zero lactose, zero sugar, etc Amul is making specialised dairy a practical option for a wider section of society.

The Tetra Pak advantage in packing and distribution

A core factor in the product’s availability across India is the use of Ultra High Temperature (UHT) Tetra Pak packages. This advanced packaging technology bypasses the need for an expensive and continuous cold chain, a significant barrier in distribution for milk and milk products, which are highly perishable. When asked if this packaging technology has helped in democratising the product, he said: “Absolutely, yes, because it is a long life format.” The UHT process results in a product with a six-month shelf life without the need for refrigeration until opened, and without any preservatives.

This enables widespread distribution. Amul operates an extensive network across the country. “Amul has a distribution network of 90 branches across India, and 20,000 distributors. Amul products are available at more than 2 million outlets,” he said. This network, supported by the UHT format, ensures a wider reach for products. “Lactose-free milk is available across the length and breadth of the country. You can get it in Srinagar. You can get it in Madurai,” he added.

Additionally, Amul packages the lactose-free milk in smaller Tetra Pak packages, which are convenient for individual one-time consumption. So, within a large family if there are 1-2 people consuming lactose-free milk while the others have regular milk, they don’t have to open a full one-litre pack.

Market dynamics of dairy vs alternatives

The market for dairy alternatives is seeing a massive influx of plant-based milks like oat, almond, soy milk. When asked if Amul views this as competition to Lactose Free milk, Mehta said that these are a separate category, not direct competition to lactose-free dairy and pointed out the technical and nutritional distinction.

“Technically, in India, anything which is not of bovine origin cannot be called milk,” he said, adding that bovine milk, whether regular or lactose-free, “is a super food that is not processed or manufactured in a plant, unlike the processed non-dairy alternatives”. For a brand like Amul, a household name in India, the competition is limited because “both are different products serving different needs”.

The lactose-free segment is witnessing a high double digit growth in India with Amul as one of the most prominent brands . “We are seeing high double digit growth and Amul is the leader by far in this segment, with more than 90 per cent market share,” he said.

Mehta attributed this growth to strong leadership and market strategy. “It is growing. It is a function of two things, distribution and the range of products that we have created around that,” he further said.

The convergence of technology, consumer trend and packaging innovation are catalysts for lactose-free milk to move from a niche product to an everyday staple in the average Indian household.